Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

In negotiating the valuation, it’s important to understand the impact of that valuation on follow-on rounds and the exit.

A waterfall analysis maps out the cap table with subsequent rounds of funding.

To run a waterfall analysis, create a spreadsheet with the cap table owners and the current fundraise round.

Include the owners, the pre, and post-money valuations.

Then apply the standard valuation of follow-on rounds of funding that will be required. 

In this exercise, it’s important to gain agreement with the startup on the exit and what is required. 

Many early-stage startups have unrealistic expectations about the exit value.

Take into consideration the impact of convertible notes, participating and non-participating preferred shares, liquidation preferences, options pools, and various exit scenarios.

Vary the valuation on the current round to see the impact on the final exit value. 

Finally, discuss the results with the startup as part of your negotiations.


Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.
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Music courtesy of Bensound

In this episode, Hall welcomes Connor Davidson, Partner at Atlanta Seed Company.

Established in December of 2019, the Atlanta Seed Fund I aims to expand upon their mission of bringing access to high-quality, early-stage investments to their clients. The Fund’s primary purpose is to purchase minority interests in Seed and Series A technology companies across the US, primarily located in secondary markets. They provide a level of service and accountability rare in today’s world of private investments. 

Atlanta Seed Company believes private investors deserve complete transparency as to where their dollars are invested, how company leadership is performing, and what the primary challenges and opportunities are with each investment. Through this transparency, their private investors are better able to make intelligent investment decisions and maintain a healthy balance in their own individual portfolios.

Connor previously worked for True Wealth Ventures in Austin, Texas, and has an extensive background in financial analysis and asset management. He received both a BBA and BS from Southern Methodist University in 2011 and an MBA from the University of Texas at Austin in 2017. He is actively involved in the Atlanta community through Skyland Trail and the Southern Capital Forum.

Connor discusses his investment thesis and how he sees the market evolving for venture funding. He also speaks about one of his current startups and some of the challenges investors and entrepreneurs face.

You can visit Atlanta Seed Company at www.atlantaseedcompany.com, and via LinkedIn at www.linkedin.com/company/atlanta-seed-company/about. 

Connor can be contacted via email at connor@atlantaseedcompany.com, and via LinkedIn at www.linkedin.com/in/connordavidson1989. 

Music courtesy of Bensound.